*Review of Foreign Currency Restrictions not imminent<\/p>\n
Until there is stability in the power sector, electricity tariffs cannot
\nremain at the levels they are currently, according to Vice President Prof.
\nYemi Osinbajo, SAN.<\/p>\n
Speaking yesterday afternoon at the Annual General Meeting of the
\nManufacturers Association of Nigeria, MAN, the Vice President who
\nrepresented President Muhammadu Buhari as the Special Guest of Honor said
\ntruth of the matter regarding electricity tariffs is that \u201cat this point,
\nif we wanted to have a cost effective tariff, the only way is to service
\nthat core value chain, the only way is to ensure that we are paying and
\ncompensating the value chain -from generation down to distribution- a cost
\neffective tariff.\u201d<\/p>\n
In a similar vein, the Vice President also made it clear at the meeting
\nthat a review of the CBN restrictions on foreign currency is not imminent.<\/p>\n
His words:\u00a0 \u201cI want to make it absolutely clear that the position is not
\nthat a review of the CBN restrictions on foreign exchange is imminent. It
\nis a short term measure, not a policy, and as things improve, we will have
\na discussion about what to do. But certainly not that a review is about to
\ntake place.\u201d<\/p>\n
He spoke more on the electricity tariffs and his comments are hereby
\nreproduced verbatim:<\/p>\n
“Power is of course crucial and as the president said in his inaugural
\naddress, to which President Mbeki referred, the question of power is one
\nthat is absolutely crucial to manufacturing and practically everything
\nelse and we shouldn’t be rejoicing at 4000 Megawatts of power. But the
\nproblems are historical and several of those problems will need tackling
\nhead on, on a day-by-day basis.<\/p>\n
\u201cOne aspect of the problem that i want to speak about, because this also
\naffects manufacturing, is the whole idea of the tariffs. Of course the
\npresident of MAN just said that we have one of the most expensive
\nelectricity in the world.<\/p>\n
\u201cNow, the truth of the matter is that at this point, if we wanted to have
\na cost effective tariff, the only way is to service that core value chain,
\nthe only way is to ensure that we are paying and compensating the value
\nchain -from generation down to distribution- a cost effective tariff.<\/p>\n
You cannot have that cost effective tariff without some pay.\u00a0 At the
\nmoment, (when you compare) how much it costs to produce power, and the
\namount of power that is generated, the losses on account of distribution
\nare significant. In some cases you have up to 40% losses in distribution,
\nand of course it is the DisCos that have to take that burden.<\/p>\n
\u201cThe GenCos (generating companies) are producing power but they expect to
\nbe paid for all the power that they produce. Now, if 40% of this is lost,
\nit means the DisCos cannot collect 40%, but they have to pay for it
\nsomehow. So government has to come in and play some kind of role in order
\nto ensure that the whole value chain is paid for.<\/p>\n
\u201cBut the most important thing is that the cost of power is reflective of
\ncosts that have to be borrowed at every stage of the value chain and today
\nthe cost of power, if it\u2019s going to be reflective in any way is simply
\nwhat it is. It will be very difficult indeed, except if we are going
\nintroduce yet another subsidy and by the way, a fair amount of that goes
\non already in the way that government supports the GenCos and the DisCos.<\/p>\n
\u201cBut I think that we must be ready to accept that for a while, until
\nthings stabilize somewhat, tariffs cannot remain at the levels at which
\nthey are today, they cannot remain at that level, and that just simply is
\nthe truth of the matter.<\/p>\n
\u201cIt certainly means that there may be higher costs, but I don’t think that
\na option of not having power is really what we want. The real issue of
\ncourse is that at the end of the day, some of the cost goes to the
\nconsumer, but a cost reflective tariff is an absolute necessity,
\notherwise, privatization and all of that simply doesn’t make sense. \u201c<\/p>\n","protected":false},"excerpt":{"rendered":"
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